Explore BrainMass

Explore BrainMass

    Accounting problem

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    From the given data, calculate the following ratios for the Logan Corporation for 20X6.
    a) current ratio
    b) quick ratio
    c) debt ratio
    d) rate of return on net sales

    Prepare journal entries for the following transactions for Lamplighter Company

    Prepare summary journal entries for the use of direct materials, direct labor and manufacturing overhead, and for the transfer of goods completed.

    Compute the cost per equivalent unit for direct materials and conversion.

    © BrainMass Inc. brainmass.com December 24, 2021, 4:49 pm ad1c9bdddf


    Solution Preview

    Accounts payable $ 60,000
    Accounts receivable 75,000
    Cash 125,000
    Merchandise inventory 90,000
    Short-term investments 50,000
    Accrued liabilities 30,000
    Notes payable (due in 20X9) 50,000
    Total assets 350,000
    Total liabilities 180,000
    Net sales revenue 225,000
    Net income 22,500
    Current Ratio:
    Your current ratio, a comparison of current assets to current liabilities, will be particularly important to you if you're thinking of borrowing money or getting credit from one of your suppliers.
    Potential creditors use this ratio to measure a company's liquidity or ability to pay off short-term debts.
    Though acceptable ratios may vary from industry to industry, a current ratio of 2.00:1 is considered the norm.
    The formula
    Current assets divided by current liabilities.
    Source: http://www.bankrate.com/brm/news/biz/bizcalcs/ratiocurrent.asp
    Current Ratio
    What it is:

    The current ratio is the standard measure of any business' financial health. It will tell you whether your business is able to meet its current obligations by measuring if it has enough assets to cover its liabilities. The standard current ratio for a healthy business is two, meaning it has twice as many assets as liabilities.
    When to use it:

    The current ratio should be part of your business' basic financial planning, meaning it should be tracked monthly or quarterly. By keeping a close eye on this figure, you will recognize if it begins to get out of line. This will allow you to take early action to prevent your business from ending up in a difficult position.
    The formula:

    Current assets divided by current liabilities.
    Source: http://home3.americanexpress.com/smallbusiness/tool/ratios/currentratio.asp

    Current Assets:
    Cash 125,000
    Accounts Rec. 75,000
    Short Term Inv. 50,000
    Inventory 90,000
    Total Current Assets 340,000

    Current Liabilities:
    Accounts Payable 60,000
    Accrued Liabilities 30,000
    Total Current Liabilities 90,000

    340,000 / 90,000 = ...

    Solution Summary

    This problem involves the fundamentals of accounting. The expert prepares the journal entries for transactions.